Cheaper fund makes NBFCs breathe easy

MUMBAI: The government-backed Special Liquidity Scheme (SLS) is offering funds relatively cheaper than prevailing market rates to NBFCs such as Edelweiss, IIFL Home, Piramal Capital Housing and KKR India Asset Finance, people associated with the fundraising exercise said.

Even the lesser known lenders such as KrazyBee, Varthana Financial, Dar Credit, and Village Financial Services are availing 90-day credit at least 50 basis points lower than the market rates, they said.

SBI Capital Market did not reply to ET’s query.

Most individual companies could not be contacted immediately for comment. KKR India Asset declined to comment.

SBI SLS Trust, the nodal agency for implementing the programme, is availing money at 5.25% from the Reserve Bank of India (RBI) to lend at 5.50-11% to non-triple A rated NBFCs within the investment grade.

NBFCs, rated as BBB+, BBB and BBB- paid interest rates in the range of 9.75-11%.

“These are the last-mile-lenders, which used to borrow from large NBFCs or mid to small banks,” said a senior executive.

Companies rated between AA and A- were charged broadly 6.5-9% to avail 90-day money.

Piramal Capital and Housing Finance is said to have raised money offering interest rates in the range of 8-8.50%. Edelweiss group companies were likely charged 8.5-9%.

“The credit appraisal takes into consideration multiple factors including the nature of the credit if secured or unsecured,” said another source.

Companies rated as A+, A or A- are availing funds at more than 9%.

Finance minister Nirmala Sitharaman had announced the Rs 30,000-crore programme in May as part of the initiative to increase liquidity for nonbank lenders and home financiers. It was primarily meant for shadow banks, rated between AA+ and BBB-, which were struggling to raise money.

The scheme is of late seen gaining traction with SLS Trust disbursing an estimated Rs 3,000 crore.

On July 22 ET reported that the liquidity window initially received an application for Rs 15,000 crore.

SLS Trust, a facilitator under the aegis of SBI Capital Markets, evaluates and does credit appraisals under the window.